Let there be homes

If all goes according to UPA plan,the economy will be back to square one

Written by The Indian Express | Published:March 15, 2013 3:05 am

Only a fortnight ago,the Union budget emphasised the challenges involved in reaching a fiscal deficit target of 4.8 per cent of the GDP for 2013-14. It is difficult to see how this reconciles with a grandiose plan to provide housing to an estimated 15 million landless households,which could cost the government at least Rs 1,50,000 crore,as envisaged under the proposed Right to Homestead bill. Since the bill sets a five-year limit for achieving the objective and the UPA government would arguably want it to go through in 2013-14,the net addition to the fisc is Rs 30,000 crore,or just about the space created by the reduced oil subsidy bill. In other words,if all goes according to the UPA plan,it will be back to square one. Even if the scheme subsumes the rural development ministry’s Indira Awaas Yojana,the gap in funding would still be at least an additional Rs 20,000 crore per year. If the scheme includes those working in the organised sector at the lower level,as the bill says,the budget requirements would be higher.

The promise of a shelter for everyone is not as admirable as it sounds. As even the US found out,and the finance ministry’s chief economic advisor Raghuram Rajan has pointed out,it is smart politics that is usually pursued at the cost of tougher reforms,principally those of skilling people. Education reforms have been put on the back burner by this government,for instance,as five key bills to reform higher education are stuck in Parliament. Yet,education,including skilling,is a far more egalitarian and necessary reform than the promise of a home for all. Of course,the UPA’s plan is not surprising. It is a part of the entitlement-based agenda this government has relentlessly pursued,at the risk of further crippling the economy.

With this latest plan,the government is likely to immediately run into the plethora of unsolved land acquisition problems. Not only that,by taking upon itself the challenge of providing affordable housing for all,the government is creating a one-way ticket to prosperity for real estate developers,as this has all the potential of a state-sponsored boom. And that is not all. Providing houses in rural areas makes little sense when the poor need to migrate to urban areas for jobs. But obviously,the government is not listening.

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